HENRY is a catchy acronym for “high earner, not rich yet.”
It describes a demographic made up of young and often highly educated professionals with substantial incomes but little or no savings.
HENRYs generally have enviable career prospects, but many of them feel financially stretched or may even live paycheck to paycheck for years, especially if they are working in cities with high living costs and/or facing large student loan payments.
If this sounds like you, it may be time to shed your HENRY status for good and focus on growing wealth — even if it means making some temporary sacrifices.
One simple metric that can be used to gauge your financial standing is your net worth, which is the total of your assets (what you own) minus your liabilities (what you owe).
Pay Attention to Your Spending
It’s virtually impossible to increase your net worth if you don’t live within your means.
After studying long hours and working your way into a good-paying job, you may feel that you deserve to spend some money on fashionable clothes, the latest smartphone, a night on the town, or a relaxing vacation.
However, if you can’t pay for most of your splurges without relying on credit — or wiping out your savings — then you may need to rein in your lifestyle.
Budgeting software and/or smartphone apps can help you analyze your spending patterns and track your financial progress.
Utilize a Workplace Retirement Plan
Making regular pre-tax contributions to a traditional 401(k) plan is a no-nonsense way to accumulate retirement assets, and it helps reduce your taxable income by the same amount.
Experts recommend saving at least 10% of your income for future needs, but if that’s not possible right away, start by contributing 3% to 6% of your salary to your retirement plan and elect to escalate your contribution level by 1% each year until you reach your target (or the contribution limit).
The maximum you can contribute to a 401(k) plan in 2022 is $20,500 ($27,000 if you are age 50 or older).
Many companies will match part of employee contributions, and free money is a great reason to save at least enough to receive a full company match and any available profit sharing.
Some plans may require that you remain employed by the company for a certain amount of time before you can keep the matching funds.
Assess Your Housing Situation
Paying rent indefinitely may do little to improve your financial situation.
Buying a home with a fixed-rate mortgage could help stabilize your housing costs, and you can build equity in the property over …….